Overhaul ADB!

The status of the Agricultural Development Bank (ADB) should be reviewed and its operations restructured to give the needed thrust to the agricultural sector, Mr. Yoofi Grant, a financial analyst and the Coordinator of the NPP’s Manifesto Committee, has said. 

The ADB, which has over the years operated as a universal bank, according to Mr. Grant should be “repositioned to help farmers upscale”.

He said beyond 2012 the Bank of Ghana (BoG) should look at ADB differently from other universal banks operating in the country, to afford it the leverage of supporting the agricultural sector.  

“We will reposition the ADB to help farmers upscale. We will speak to the BoG to look at ADB differently from other universal banks.”

Addressing the chronic lack of credit to the agric sector, Mr. Grant said: “a lot of the other financial institutions think agriculture is such a high-risk area that it makes it difficult to lend to farmers. We need to focus on ADB as an agricultural bank, giving them what it takes to make them an agricultural bank and support agriculture.”

He was addressing a cross-section of the media at a roundtable on agricultural development themed “Agenda for Agric Beyond 2012” organised by Citi FM for four political parties in Accra.

Agriculture accounted for 25.6% of Ghana’s GDP in 2011, and employed 41.6% of the working population in 2010, according to census data. The sector is often said to be growing below potential, with farmers facing perennial problems such as the unavailability of modern equipment, erratic rainfall, and expensive credit.

Nana Ofori Owusu, the Progressive People’s Party (PPP)’s representative on the programme, said “interest rates are too high [and that] there is no relation between government and farmers.”

Loans to farmers make up about 30 percent of ADB’s loan portfolio, he said, describing the situation as unacceptable.     

ADB, which was set up in 1965 by Act 286, is wholly public-owned -- with government holding 52% of the shareholding while the remaining 48% is held by the Financial Investment Trust on behalf of the Bank of Ghana. It provides a full range of banking products and services in retail, commercial, corporate and investment banking.

Within the past few months, there have been strong indications that the bank is bracing to  list on the Ghana Stock Exchange (GSE) to raise additional equity to deepen its operations. However, the move is yet to be endorsed by government, which is the majority shareholder.

Despite its limited support, the bank continues to remain the number-one financier in the agricultural sector. In 2011, the bank’s total lending to the agricultural sector amounted to GH¢142million. The bank also made some new interventions in the agro-processing sub-sector and invested a total of GH¢84.5million.

In the 2011 financial year, the bank transferred GH¢25.0million to its stated capital account, which increased its stated capital from GH¢50 million to GH¢75 million. 

This enabled it to fully comply with the regulatory minimum capital requirement of GH¢60million ahead of the 31st December 2012 deadline given by the Bank of Ghana for full compliance by indigenous Ghanaian banks.

Source: B&FT